Loper Corporation manufactures only one product. The standard cost per unit of product is shown below: Direct
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Question:
Direct materials -- 2 pounds at $5 per pound $10.00
Direct labor -- 2 hours at $12 per hour 24.00
Variable manufacturing overhead 12.00
Fixed manufacturing costs 6.00
Total standard cost per unit $52.00
The default factory overhead rate is $9 per direct labor hour ($18/2). It was calculated from a master manufacturing overhead budget based on normal production of 15,000 direct labor hours (7,500 units) for the month. The master budget showed total variable costs of $90,000 ($6 per hour) and total fixed overhead costs of $45,000 ($3 per hour). Overhead is applied based on direct labor hours. The actual costs for October in the production of 7,400 units were as follows:
Direct materials (15,000 pounds) $73,500
Direct labor (14,900 hours) 181,780
Variable overhead 88,990
Fixed overhead 44,000
Total manufacturing costs $388,270
The purchasing department purchases the quantities of raw materials expected to be used in production each month. Raw material inventories, therefore, can be ignored.
- Instructions:
- Calculate all variances for materials, labor, and overhead. Your answer should include material price variance, material quantity variance, labor price variance, labor quantity variance, and total overhead variance.
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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